Even as more and more retailers are complaining of sales not bouncing after the economic downturn and credit card companies reporting increases in their revenues and earnings, one merchant is combining both the effects and making news. Target has launched a new credit card program which rewards the cardholders by offering them a 5% discount every time they visit the retailer and pay with the credit card of the retailer conglomerate. This program has turned out to be a success judging by the sales figures announced by Target for the month of September. As per the release from the retailer, Target stores witnessed a 1.3% increase in the sales during the month of September. The company is depending heavily on the REDcard that was released recently by the company. This program is expected to enhance the sales number as customers go into the holiday shopping time.
This REDcard is very different from the normal credit cards. While the normal cards give only a first time discount for on the spot application of credit cards, the card holder in case of REDcard walks away with a 5% discount for every visit and payment made with the card. The same 5% discount is also available to the card holders when they make online payments with the card on the website of the retailer. The program is being tested in Kansas City stores currently and has been very successful. The company is planning to launch this program across the country and the employees are expecting the same success and hoping for the Kansas City success to help support the company in its competition with WalMart, currently the largest retailer in the country.
As we move closer into the holiday shopping season, Target's CEO. Gregg W. Steinhael said that the future plans of the company have increased promotions and marketing relating to this crdit card program. Target had witnessed a lot of defaults during the economic downturn, when the number reached a company high of 1.25 billion in 2008, even as sales dropped drastically. This number fell to 1.19 billion in 2009. The card profits too had fallen to 155 million dollars in 2008 from 797 million dollars in the previous year. The company has currently reported an increase in earnings to 260 million dollars in the first half. This also includes 113 million dollars which the company had made only by levying late fees on the card holders.